KYIV

Fitch Ratings has revised the Outlooks on five Ukrainian banks to Positive from Stable and affirmed their long-term Issuer Default Ratings (IDRs). The banks’ Viability Ratings (VRs) are unaffected by the rating action.

The affected banks are JSC CB PRIVATBANK (Privat), JSC State Savings Bank of Ukraine (Oschadbank), JSC The State Export-Import Bank of Ukraine (Ukreximbank), JSB Ukrgasbank (Ukrgas) and ProCredit Bank (Ukraine) (PCBU).

The rating actions follow Fitch’s similar action on Ukraine’s sovereign rating, reflecting the resilience of Ukraine’s credit fundamentals to the coronavirus shock and our expectation of economic recovery, Fitch said in a report.

The agency said that the long-term IDRs, Support Ratings (SRs) and Support Rating Floors (SRFs) of state-owned Privat, Oschadbank, Ukreximbank and Ukrgas reflect Fitch’s view of support these banks could receive from the sovereign, if required.

“The revision of their Outlooks to Positive mirrors that on the sovereign and reflects Fitch’s expectation that the Ukrainian authorities’ ability to provide support to the banks may improve,” it said.

The propensity of the Ukrainian authorities to provide support to the state-owned banks remains high, in Fitch’s view, given their full ownership by the state (95 percent at Ukrgas), systemic importance (greater for Privat and Oschadbank, given their 32 percent and 18 percent market shares in retail deposits, respectively, at the end of the first half of 2021), the record of capital support provided under different governments (Oschadbank, Ukreximbank) and post-nationalisation equity support to Privat.

However, the ability of the authorities to provide support is limited, particularly in foreign currency, as indicated by Ukraine’s ‘B’ Long-Term Foreign-Currency IDR, Fitch said.

Fitch views Privat’s state ownership as non-strategic as it resulted from a state-led rescue, rather than policy objectives, and the authorities plan to dispose of a controlling stake in the bank, potentially via an IPO, in the medium term. Even when the bank is privatised, Privat’s high systemic importance would still result in a strong incentive for the authorities to provide support, in our view, the agency said.

The senior unsecured debt ratings of Oschadbank and Ukreximbank, issued by UK-registered SSB No.1 PLC and BIZ Finance PLC, respectively, are aligned with the banks’ long-term foreign-currency IDRs due to average recovery expectations as captured by the Recovery Ratings of ‘RR4′.

The affirmation of all four banks’ national ratings at ‘AA’ with Stable outlooks reflects their unchanged creditworthiness relative to that of peers within Ukraine.